evangelical networker wants Facebook to open up the world

evangelical networker wants Facebook to open up the world

21st Aug 11:19

Sheryl Sandberg and her lofty ideals are driving a dizzying expansion of the social networking site

Sheryl Sandberg turns 40 this summer and has more reason than most to feel conscious of the milestone. Her colleagues at Facebook, where she is chief operating officer, are all bright young techies, and her boss, Mark Zuckerberg, is only 25.

"I remember before the internet…," Sandberg says on a visit to the firm's modest London office in Soho Square. "When you say that in our headquarters, everyone kinda looks at you like, 'Did they have cars?'"

Not that Sandberg has lost any of the fire of youth: bright and vivacious, the former Google executive bubbles with the kind of evangelical enthusiasm you might expect from someone running what has become the world's leading social networking site, pulling away from rivals such as MySpace, part of Rupert Murdoch's News Corporation, and the AOL-owned Bebo.

And while she plays down any suggestions of triumphalism, she does not hold back when it comes to the Californian company's global ambitions. "I think we think we're trying to change the world and having some success with that," she says. "We have really big aspirations around making the world a more open and transparent place. We define our aspirations more in terms of that mission than in terms of the company aspirations."

The way Facebook is doing that may not be apparent to its British devotees, who generally use the site to upload photos and share news and banter with their friends and acquaintances.

But outside the narcissistic west, Facebook claims to be a 21st-century torchbearer for democratic values. Like its upstart rival Twitter, it played a role in giving vent to political dissent in Iran after June's disputed elections, and has faced intermittent jamming as a result.

Sandberg also points to examples closer to home of Facebook's power to connect people. She herself was contacted through the site by a long-lost college "little sister", who had no idea her former mentor was its chief operating officer. "Finding my 'little sister' to me was profound. That's the stuff we are really ambitious about."

Rise of Twitter

But Facebook is a business, not a philanthropic exercise, and it has been growing with dizzying speed since Zuckerberg launched it from his Harvard dorm room in 2004.

The site hit 200 million registered users in April, of whom 18 million are in Britain. When Sandberg arrived from Google in March 2008, it was half that and still behind MySpace. The latter has been faltering of late and has had to cut jobs as a result, while Bebo is struggling too, and Friends Reunited - sold by ITV this month for £25m - is practically moribund.

It all looks very encouraging for Facebook, and Sandberg is keen to point out that half of users come back to the site every day. "On consumer internet I have never seen or heard of anything like it."

But the world of social networking is still in its infancy and users can be fickle. The rise of Twitter, the sector's phenomenon of the moment, has posed a challenge. Rumour has it that Facebook tried to buy the upstart for $500m; whether or not that was the case, it last week succeeded in snapping up another potential rival when it paid $50m (£30m) for FriendFeed, a tiny Silicon Valley start-up. And who knows what might come along next year?

"We understand that we are not going to be the only property doing these things, and to the extent that there are properties like Twitter who are showing the world how important this is, we are happy to see that," Sandberg says. "What Twitter is doing is a very specific thing, which is short updates in real time, and so that's obviously very important, much as our status updates are very important to us."

Sandberg is unconvinced by the idea that social networking will conform to the "winner takes all" pattern that has seen Google, Amazon, YouTube and Wikipedia end up as dominant players in their respective areas.

"We think our growth is based on the fact that we provide the best product," she explains. "What you'll see from us is a real commitment to being a technology-led company.

"[We're] trying to put out the very best technology in the world, which enables people to share with all the privacy controls they want - I think we are by far the leader in that area worldwide - and as efficiently as possible. That doesn't mean there isn't room for other players and we won't see others, but we're happy that we think we have executed pretty well and we want to continue to do better."

She dismisses the idea that Facebook might be undercut by a similar product run, Wikipedia-style, on a not-for-profit basis. "Wikipedia is very inexpensive for two reasons. One, the technology's not doing the algorithmic stuff; you do a search and it's given you that search. And the second is that it's edited for free by the world ... The technology underlying Facebook is very expensive and more similar to Google-like technology than it is to Wikipedia."

Which brings the conversation to the thorny question of whether Facebook is able to convert its undeniably huge reach into sustainable profitability. Sandberg says the company has been profitable for six quarters before interest and tax, and is close to being cashflow profitable in 2010. Zuckerberg has also said that revenues will grow 70% this year - but no one outside the company knows the numbers. Some suggest revenues of $500m this year.

The recent investment of $200m by the Russian company Digital Sky Technologies - giving it a 2% stake and implying a total valuation of $10bn - should not be taken as a sign that Facebook needed any cash, Sandberg says. "You raise money when you can, not when you need it," she says, invoking a mantra she learned at Harvard Business School. "This just gives us a little bit more flexibility." Nor are there plans to go public "any time soon".

Microsoft also owns a 1.6% stake, for which it paid $240m in October 2007, but Facebook has resisted all moves to buy it out.

The company's business model is straightforward, says Sandberg: it's advertising. Although it is working on other revenue streams, such as allowing transactions involving the third-party applications on the site, advertising is sufficient to build revenues, she says. And to work, the ads have to be subtle. "This is not a property where we let advertisers walk up to users. This is a property where we invite advertisers to invite users to interact with them."

Private information

Not that users have always seen it like that: many were angered by an ad programme called Beacon - introduced before Sandberg's arrival - that shared information about their buying habits with their friends. Facebook subsequently apologised but the controversy highlighted persistent worries about privacy.

That debate took a surreal, even comic twist last month when private information about the next head of MI6, Sir John Sawers, was circulated on the site by his wife.

Facebook argues that it allows users complete control over what information they publish and to whom. In the case of Sawers, none of the available privacy settings had been applied. Indeed, many users, especially younger ones, are seemingly unconcerned about putting details of their lives online.

"We think that the fact we offer by far the leading and most granular privacy controls on the web has been a big factor in our success," Sandberg says.

"People can request you to be their friend all day long and, if you want to, you can refuse all of them - you can make all of your information private and they can't see anything other than your name and location. So yes, you do get inquired about but you have complete control of your information on Facebook."

The company is not complacent, however, and has "two or three policy people" in Washington, while the former Cisco executive Richard Allan has recently joined to head lobbying efforts in the European Union.

Sandberg herself has impressive political connections, dating to her post-Harvard stint at the World Bank under Larry Summers, now the director of Barack Obama's national economic council. She followed Summers to the US treasury in the latter half of the Clinton years, rising to be chief of staff.

"Policy is very important; our relationship with regulators and government is very important to us," says Sandberg. "These are evolving trends." But like everything else in Facebook's five-year history, that evolution is likely to take place at revolutionary pace.

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